I agree with inspector 1.

Dwelling unit is defined as having certain facilities. Although the bathroom isn't in the definition, it isn't reasonable to say the bathroom is excluded. The same would apply to an attached garage.

Using a farm as an example, the dwelling unit is on the property, but the shop might be a truck ride away and clearly isn't a dwelling unit. To require a legal subdivision to get around all dwelling unit rules in the shop isn't a reasonable application of the definition.

Inspector 2 would need to make up another rule to make his application of the definition reasonable in more circumstances. Since he can't do that, he must be wrong.